Van Dyck Law, LLC is a full service Estate Planning & Elder Law practice. They write about comprehensive planning in the areas of wills, trusts, powers of attorney, medical directives, Elder Law and probate & estate administration.

April 2016

04/29/2016

"According to the American Society for the Prevention of Cruelty to Animals, Wisconsin's law has allowed people to leave money in trusts to animals since 1969."

In states like California and Wisconsin, you can make sure your pet will have care after you're gone. However, in Minnesota, your pet might not be pampered when you pass away. At present, the Gopher State is the only state in the U.S. without a law allowing pet owners to create trusts to care for their animals in the event the owner cannot.

Smith is an animal lover who has at least two photos of his golden retriever mixed-breed pup in his legislative office in Saint Paul. He also has Reagan, along with his wife and children, on his campaign website. As an attorney, Smith commented that he sees his clients make gifts to their animals in their estate planning about one third of the time.

Under current state law in Minnesota, residents may designate money in their wills for their pets, but there's no legal requirement that the cash be spent on the animals. This is not the same as in other states that allow for animal trusts. In a trust, any cash left for the care of an animal must legally be spent on Fido or Spot. When he, she or it dies, any money remaining in the trust could go to other heirs or be distributed as instructed in the trust or as determined by the probate court.

In addition, the terms of an animal trust could also be used for payment for care for an animal when its owner is still alive but no longer able to manage it. According to Smith, a pet trust wouldn't allow its creator to avoid debts or taxes out of his or her estate, which means it wouldn't cost the state anything to adopt an animal trust law.

04/28/2016

The article "How to handle a parent not having a will" from New Jersey 101.5 says that some people may postpone this for as long as possible to avoid dealing with fears relating to their own passing. They also may feel overwhelmed by the process.

Also, if Dad has recently passed away, Mom may be hearing, "You're gonna die soon, so please leave me an appropriate share." That can be difficult, too. And talk of drafting a will may bring back painful emotions linked to the father's death. These feelings are natural.

But instead of the children pressuring Mom, they should point out some of the benefits a will can provide, such as how a will allows her to specify how her assets will be transferred at her death. This can include making bequests of family heirlooms to specific people or include charitable contributions. If there's no will, Mom won't have any control. Her assets will pass according to the intestate laws of the state.

Probating an estate without a will can mean more time and money than an estate with a will. In addition, not having a will leaves the heirs to contend with it on top of their grieving.

Proper planning allows Mom to minimize estate taxes, inheritance taxes, and even some income taxes depending on her circumstances. This allows more wealth to pass to her heirs.

Parents can be quite uncomfortable talking about these issues with their children, so you might solicit the help of a close friend or other family members like an aunt or uncle to help bring up the subject. Many families find that an estate planning attorney can help facilitate the process. Be prepared for this to take some time. It may take several discussions to get things rolling.

Experts estimate that raising a child to age 18 costs roughly $250,000 and those parents of children with disabilities and special needs will have costs that could be as much as 10 times more. With these types of financial challenges, here are some key areas to focus on to protect and grow your money.

Assemble a team of experts. That team should include an elder law attorney, doctor, accountant, and government benefits specialist to help you understand Social Security, Medicaid, and other state and federal government programs;

Draft a letter of intent. This is the child's history, medical needs, doctors, allergies, and likes and dislikes, which can be helpful to guide and direct your child's future trustee and guardian;

Draft a will. This gives direction to your child's guardian and to the courts as to how assets should be moved and allocated;

Create a Special Needs Trust (SNT). This will serve as a separate entity for your child to keep money so that he or she isn't disqualified from assistance programs; and

Create a plan for building assets.

Let's focus on the special needs trust.

Setting up a special needs trust is a fairly straightforward process, but the laws surrounding special needs trusts are very complicated. Don't try this on your own. Hire an experienced elder law and Special Needs Trust attorney.

With a special needs trust in place, you make certain that there's a financial mechanism to continue to provide the child with the highest quality of life possible. Completing a SNT can take a big weight off of parents' shoulders. Many parents wait until it's too late, or they leave money directly to the child. This makes everything much more complicated.

Selecting the future trustee is a matter of determining who will be the right person for the job. It may not be the caregiver. Some special needs trusts use professional trustees or pooled trusts, which are administered and managed by non-profit organizations.

Special needs require special planning. You should work with your team and your family to establish a climate to help you raise and provide for your child. Once created, this will offer you peace of mind in protecting and caring for your family and child.

Create a safety net. Most important is to have sufficient emergency funds that can be your financial safety net. Single parents should save at least six months' worth of expenses in an account that's untouched until an emergency occurs.

Make insurance a priority. Medical insurance is another high priority. Unforeseen medical emergencies can be a big drain on a family's cash flow. There are many health insurance plans that include regular check-ups for parents and their dependents—use this to your family's advantage. In addition, life insurance can secure a child's future. The right amount is usually enough to cover the children's living expenses and education.

Adhere to a cash flow plan. This will help a family stay on a budget, especially when there's less money coming in. Treat yourself once in a while, but avoid giving in to impulse purchases. A family budget also educates children about money and may help them understand why parents may not be able to afford some things.

Do your estate planning. If the parent passes away or becomes incapacitated, you want to ensure your children's care. This is where you need to do estate planning. Single parents need to prepare a will and choose an executor so their children can receive the money left to them.

04/25/2016

"While nobody wants to think about dying, borrowers should take advance steps to assure that an outstanding mortgage doesn't become a burden for heirs."

No homebuyers go to the closing thinking about what happens if they die before their mortgage gets paid off, says TheWall Street Journal in "What Happens When a Homeowner Dies before the Mortgage Is Paid?" Even so, borrowers should take advance steps to make sure that an outstanding mortgage doesn't become a problem for their loved ones.

The mortgage is secured by the house. Nonpayment can't damage an heir's credit score unless he or she is a co-signer on the mortgage. Nonetheless, they should keep paying on the mortgage if possible because missed payments could incur penalties and lead to foreclosure.

Lenders who are notified of the borrower's death right away are usually understanding about resolving estate issues to avoid foreclosure.

Postmortem mortgage policies vary depending on the lender. These terms are usually in the fine print of the mortgage.

See if the lender will permit anyone else to assume the mortgage upon the borrower's death. If the deceased is the only borrower, most lenders typically do not do this. In addition, if spouses are co-borrowers, don't assume that the surviving spouse can just take over the same note and terms when it's the sole breadwinner who passes away.

There is a federal law that places restrictions on lenders' ability to cancel or call loans due to death; however, the prohibitions exist only if certain conditions are satisfied.

When a lender is informed of a borrower's death, it may be reluctant to release loan information because of privacy restrictions. Along with a death certificate, survivors and administrators may be required to provide additional information to show their legal status.

The Consumer Financial Protection Bureau introduced new borrower protections in 2014 to make it easier for heirs to acquire account information, pay off the loan, or request a loan modification after the death of a homeowner. The new rules mandate that loan servicers promptly communicate with heirs after being notified of a borrower's death.

The goal is avoiding unnecessary defaults and foreclosures.

In addition, when estate planning involves real estate, whether a borrower is on the property title also matters. If homeowners anticipate issues among their heirs over the fate of the property, they should put their inheritance wishes regarding who inherits and/or gets to stay in the house in their will or other estate planning document.

Finally, estate laws are complex and are not the same in each state. You should consult with an estate planning attorney.

04/22/2016

"In the event of your untimely demise, the government slaps an estate tax or death tax on your business and reduces the worth of your business by 50%."

The Huffington Post says in "5 Things Estate Planning Can Do for You and Your Business," that co-owners, family members, and ex-spouses can suddenly come out of nowhere to claim some of your successful business. Your company is reduced to nothing in less than a year. However, proper estate planning protects your business in case there are unexpected circumstances.

Estate planning can be used by business owners to avoid unfortunate events and to prevent seizure and depreciation of the business assets. This can decrease the stress and hassles that occur immediately after you die. Here are some good estate planning ideas to help your business.

More options for your business. Solid estate planning gives you the option of buy-sell agreement. If your business has one or more co-owners, this agreement ensures that upon the death of any owner, the interest of the deceased is automatically purchased by the other owner(s). The beneficiaries of the deceased owner, such as the spouse, children, or other family member won't unintentionally become owners. This strategy can alleviate some stress in an already stressful situation, immediately after the death of an owner or part owner of a business.

Guarantee the longevity of your business. Sole proprietors, small businesses, and big companies all want to pass their enterprises to future generations to keep their legacies alive. Estate planning can ensure the longevity of your business with a business transition plan.

Minimize taxes. A business owner can transfer business assets to his or her children and retain a source of income by establishing a grantor retained annuity trust (GRAT). This will help make sure that when business assets grow over time, the appreciation in equity and value of your business will not be hit with huge tax bills.

Succession planning for your business. Good estate planning will ensure that your business is preserved and operating the way you'd want it to run. Any issues in the transfer of management and ownership when you're gone are conducted effectively with wise estate planning.

Plan for the future. A good succession plan for your business could take several years to create, so start early. This can help you see the bigger picture for your business and present new ideas.

04/21/2016

Huffington Post reports in "Writing an Eldercare Plan," that elder law attorneys view being elder-proofed as having legal documents such as living wills, do not resuscitate orders (DNR), durable powers of attorney for healthcare and finances, and a will.

But there's an area of planning that isn't given much attention. That is the day-to-day decision-making to ensure the desires of the senior are followed once they are unable to make those decisions known. It's important to write an eldercare plan to document his or her expressed wishes formally, so that they can have a say in how they will be cared for as they get older.

It's very important for seniors and their loved ones to discuss a care plan for the future before disease or dementia come into play, or a crisis causes eldercare services to become urgently needed. Get the plan drafted while the senior is still fully cognizant and rational. They can be signed when other end-of-life documents are put in place.

In truth, everyone wins with early discussions. When the patient is involved in the decisions for his or her potential care, the family has a better understanding of their preferences and are more prepared for any tough questions.

A good eldercare plan designates the roles and responsibilities for the care of the senior to specific individuals in writing. In addition, healthcare preferences and treatments can be detailed.

If your loved one has been diagnosed with Alzheimer's or Parkinson's disease, families should begin their elder and estate planning soon after the diagnosis, so that the patient can be an active participant. As part of your end-of-life documents make sure your elder law attorney drafts a health care proxy so that your loved one can designate a trust person to make decisions if he or she become incapacitated.

Start the eldercare plan process with a meeting with all of the family and important loved ones, friends, and even good neighbors. In addition, speak with an experienced elder law attorney so that nothing is left to chance.

"We have a responsibility to protect our senior citizens," Gallivan said. "Elder abuse, whether physical, psychological or financial, is on the rise as our senior population continues to grow. This legislation helps ensure those who abuse and exploit the elderly are held accountable and do not go unpunished."

The bill proposes to allow recorded testimony from elderly witnesses to be preserved and used as evidence at a later date in a criminal proceeding. Right now, under state law, victims can only be examined conditionally—that is, recording their testimony before a trial starts—if they are suffering from a demonstrable physical illness or are incapacitated.

In many instances, elderly victims who appear healthy at the start of an investigation die prior to the start of the trial.

In a prosecution from a few years back, a man in his 90's, who was supposedly very healthy for his age, was the victim of theft by his long-time home aide. He died after the aide's arrest but before the case went to a grand jury. The case was prosecuted, but would have been an easier conviction with the testimony. The aide confessed.

"Offenders should not be able to game the system by delaying legal proceedings in the hope that an elderly witness will pass away before trial," Gallivan said.

The bill has been sent to the New York State Assembly for consideration.

If a failure to include the cash in the inventory of the estate assets keeps the estate below the reporting threshold and no return was filed, the unpaid tax on the cash will accrue interest. Plus, the estate and executor may be subject to penalties for nonpayment, as well as facing civil and criminal penalties if this failure to file is deemed fraudulent.

Unlike cases where a return is filed, there's no statute of limitations where assets are not reported; the assets haven't been disclosed, and the tax authorities haven't been given an opportunity to review and evaluate reported information.

Even if the failure to file is an honest mistake, if the estate is audited, the executor can be personally liable for the unpaid tax, interest and penalties because he has distributed the estate's assets.

If you properly prepared but filed the return late, if one was never filed or if one was filed but the cash not reported, taking care of this should give a person peace of mind that it's likely to be a pretty minor tax cost.

Talk with a knowledgeable and reputable estate planning tax attorney about this situation.

When someone dies, they typically will have two types of property at death. These are probate assets and non-probate assets.

Probate assets are those that a person owns alone without a named beneficiary. The probate assets will pass in accordance with the terms of a person's will. However, if there's no will, the assets pass according to the state's laws of intestacy. Non-probate assets include assets that a person owns jointly with another person, like a home or a joint checking accounts, and assets which designate a beneficiary. These are things like life insurance and retirement assets. Non-probate assets pass to the joint survivor or the named beneficiary by operation of law. These aren't governed by the person's will or the laws of intestacy (unless the named beneficiary is the estate).

In one example, if the father died with probate assets, his estate would be required to be administered through the probate court in the county of his residence at the time of his death. If the father had a will, it's presented for probate. The person named in the will as the executor can qualify and obtain Letters Testamentary—these authorize him or her to act on behalf of the estate. If there isn't a will, an administrator is appointed. Generally, the spouse and then the children will have the first right to such an appointment. In either situation, everyone named in the will and all heirs at law (which include children) must be given notice of probate. They can also requested and get a copy of the will.

A person can choose to leave nothing to a spouse, but a spouse is typically entitled to claim an elective share. In many states, the spouse receives one third of a decedent's estate.

If the father died without a will and if there was no premarital agreement, then assets pass in intestacy where the surviving spouse will receive the first 25% under some state laws. The rest will pass to the children (and the children of deceased siblings), if any.